Tata Chemicals has acquired British Salt, the producer of around half of the UK’s pure salt, for £93 million ($145 million).
Brunner Mond, which is a 100% subsidiary of Tata Chemicals, will buy the entire equity of British Salt from Lloyds Development Capital (LDC), a private equity firm. Brunner Mond is the UK’s only soda ash and sodium bicarbonate producer, with its main facility in Cheshire.
British Salt is the UK's leading manufacturer of pure dried vacuum salt products with a market share of around 50%. The company owns brine wells in the UK and markets a variety of specialist products targeted at a range of industries, from food processing to chemicals production. It employs 125 people at its facility in Middlewich. LDC backed an original management buyout of British Salt in 2007, acquiring the business from its US parent company. LDC has already cashed out part of its investment through a sale last year of British Salt's natural gas storage facilities to EDF Energy.
The acquisition provides an opportunity for Brunner Mond to secure long-term brine supplies for its operations. Tata Chemicals, part of Indian conglomerate the Tata group, bought Brunner Mond in early 2006 in an acquisition that made it the third-largest soda ash producer in the world. Subsequently in early 2008, Tata Chemicals shelled out a billion dollars to acquire General Chemical Industrial Products. General Chemical is a soda ash producer with a capacity of 2.5 million tonnes per annum at its manufacturing facilities at the Green River Basin in Wyoming.
LDC is the private equity division of Lloyds Banking Group. It has a portfolio of over 60 companies valued in excess of £2 billion.
Brunner Mond was advised by Ernst & Young, with legal advice from Addleshaw Goddard. LDC was advised by Deloitte with legal advice from DLA. The British Salt deal is subject to regulatory approvals and is expected to close next month.
Tata Chemicals said it intends to finance the acquisition through non-recourse debt. As it was not advised by a lending bank, advisers are likely to be jockeying for a role on the deal. Even though the amount of debt to be raised is relatively small, it is an opportunity for banks to strengthen their relationship with a group that has turned out to be one of India’s most prolific cross-border acquirers.